Chinese Economics Thread

Eventine

Junior Member
Registered Member
Product consumption is a small portion of overall consumption. Big ticket items like rent, medical care and food are locally priced.

The biggest exported item for consumers is a car, and Chinese cars are banned in the US.

Environment is also local. John would on average live fewer years, have higher rates of mental illness and drug use, and be more likely to become a victim of crime. His children are more likely to go to school with misbehaving children testing lower on PISA. Does the exchange rate help him?

Until you are ultra rich and able to insulate yourself from basic problems like crime, health, rent, mental illness, education, transportation, etc all this extra stuff doesn't matter.
Healthier, happier people do not necessarily have more money; or are valued more by the global market.

The fact of the matter is, if he wanted those benefits, John could always take his life savings and retire in China - or if not China, then Southeast Asia, Eastern Europe, Japan, or any number of countries whose currencies trade poorly against the US dollar (this list can often be determined by looking at the difference between GDP nominal and GDP PPP, funny enough). Indeed, this is an increasingly popular life-style choice among Americans.

They are able to do this because the global market values their labor at a premium, such that they can trade it for so much more than their equivalent in China, Southeast Asia, Eastern Europe, etc. could. They could, if they chose to immigrate to those countries, live much better than locals could, while having achieved much less than locals did. While the reverse is not the case.

Of course, John was just an extreme example, used to illustrate a particular phenomenon through exaggeration. The better, more realistic example is not an impoverished minimum wage worker moving to China, but the much larger industry of companies exploiting the exchange rate for cross-border labor, trading, tourism, and all sorts of other activities. The most important of these being sustaining the lavish and vastly wasteful American empire.

This is the global financial system that was built by the US post-World War 2; the one that puts them at the top and everyone else at a disadvantage. Make no mistake, China has contributed to this empire - through providing Americans with cheap products, while taking the dollar as premium exchange, it has contributed greatly to the dollar's inflated value, and allowed Americans to trade very little of their own efforts, for very much of China's.
 
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FairAndUnbiased

Brigadier
Registered Member
Healthier, happier people do not necessarily have more money; or are valued more by the global market.
The global market isn't GDP though. Only things that are tradable form part of the global market.
The fact of the matter is, if he wanted those benefits, John could always take his life savings and retire in China - or if not China, then Southeast Asia, Eastern Europe, Japan, or any number of countries whose currencies trade poorly against the US dollar (this list can often be determined by looking at the difference between GDP nominal and GDP PPP, funny enough). Indeed, this is an increasingly popular life-style choice among Americans.
Really???

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$500 doesn't even get you the ticket. And China doesn't have to let them in.
They are able to do this because the global market values their labor at a premium, such that they can trade it for so much more than their equivalent in China, Southeast Asia, Eastern Europe, etc. could. They could, if they chose to immigrate to those countries, live much better than locals could, while having achieved much less than locals did. While the reverse is not the case.
The only way for them to cash in on this is to buy huge quantities of Chinese products such that the savings outweigh the transaction and overhead costs, including the overhead cost of staying alive, fed, housed, and able to keep making McDonalds wages.
Of course, John was just an extreme example, used to illustrate a particular phenomenon through exaggeration. The better, more realistic example is not an impoverished minimum wage worker moving to China, but the much larger industry of companies exploiting the exchange rate for cross-border labor, trading, tourism, and all sorts of other activities. The most important of these being sustaining the lavish and vastly wasteful American empire.
Yet because of how wasteful it is, the empire is struggling militarily, industrially and socially. Nazi Germany's GDP per capita was skyrocketing even as Soviet tanks closed in on Berlin and they lost their entire Eastern European industrial base.

Economic_development_of_Germany_1930-1950.jpg

This is the global financial system that was built by the US post-World War 2; the one that puts them at the top and everyone else at a disadvantage. Make no mistake, China has contributed to this empire - through providing Americans with cheap products, while taking the dollar as premium exchange, it has contributed greatly to the dollar's inflated value, and allowed Americans to trade very little of their own efforts, for very much of China's.
China has historically taken USD to trade for western products. Once China is basically banned from buying any products that the west has a comparative advantage in, what is the point of USD?
 

abenomics12345

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Really???

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$500 doesn't even get you the ticket. And China doesn't have to let them in.

I'm sure you've seen the Youtube videos of Americans discovering China and learning about the lies. China is very much interested in letting the world see what China is actually about as opposed to what Lingling Wei says its like.

Yet because of how wasteful it is, the empire is struggling militarily, industrially and socially.

Feature, not bug. The bottom 50% of the empire never was treated like citizens. The top 1% of Americans have never lived better with soaring asset prices and purchasing power (they are really global citizens who are very much interested in defending their USD-based purchasing power).

China has historically taken USD to trade for western products. Once China is basically banned from buying any products that the west has a comparative advantage in, what is the point of USD?

Asset appreciation. Individuals are greedy and want to be rich. 'China' is not just the state - but rather individuals and corporations - including the
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.
 

tygyg1111

Captain
Registered Member
This is an interesting framing - I would suggest that focusing on domestic purchasing power is a necessary condition to 'stabilization of backyard'.

Forget the US (they've gone full Karen), the other trade partners with China (regardless of the EU or the developed markets) are finding it increasingly difficult (domestic politics) to allow the locust-like Chinese competition. Examples of this include EU tariffs on Chinese EVs (which they are absolutely willing to negotiate), but more importantly,
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, and even
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.

What does it tell you when your most
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is telling you 'look man you can't keep doing this'?

You might say, well China should just invest locally in the target market. Of course they are, but these are not jobs for the domestic economy in China - and while China will obviously benefit from this via repatriation of profits; local citizens cannot benefit unless they could invest in the companies that made these profits.

Additionally, Chinese companies need to realize they cannot have foreign employees work as hard as domestic Chinese employees - see the latest
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.
I disagree (unless I am misunderstanding) - Allowing RMB appreciation is essentially a voluntary Plaza accord, if external conditions aren't favorable you are pricing yourself out of competitiveness, and potentially dealing a huge blow to a workforce that may become redundant due to volume drop.
The current setup make China's products extremely competitive, at the cost of individual "richness", putting Chinese industries and products on the verge of dominating the global market, hence the tariffs.
The egg here imo is eliminating any sources of harm that result from currency appreciation - namely loss of market leading to volume reduction and stagnation at home, inability to set standards (loss of adoption) leading to loss of IP control.
Once those risks are neutralised (China owns backyard, global key markets dominated with most competitors having gone bust or bought out), then you have a safe environment for the necessary price increase.
Gaining the benefits depends on having the hard power to dissuade friendly competitors (including "staunch allies") from being tricky; without it everyone and their cat will be trying to gain at the expense of China.
 

tygyg1111

Captain
Registered Member
I disagree (unless I am misunderstanding) - Allowing RMB appreciation is essentially a voluntary Plaza accord, if external conditions aren't favorable you are pricing yourself out of competitiveness, and potentially dealing a huge blow to a workforce that may become redundant due to volume drop.
The current setup make China's products extremely competitive, at the cost of individual "richness", putting Chinese industries and products on the verge of dominating the global market, hence the tariffs.
The egg here imo is eliminating any sources of harm that result from currency appreciation - namely loss of market leading to volume reduction and stagnation at home, inability to set standards (loss of adoption) leading to loss of IP control.
Once those risks are neutralised (China owns backyard, global key markets dominated with most competitors having gone bust or bought out), then you have a safe environment for the necessary price increase.
Gaining the benefits depends on having the hard power to dissuade friendly competitors (including "staunch allies") from being tricky; without it everyone and their cat will be trying to gain at the expense of China.
The worry here is how will China avoid the over-financialization path of the US, and retain the hard ability to build and create as well as allowing its citizens to hold supreme purchasing power in the world
 

Eventine

Junior Member
Registered Member
The global market isn't GDP though. Only things that are tradable form part of the global market.
Almost everything worth buying, has a price. The US's historical success was primarily accomplished through brain draining the rest of the world, and of course, they did this with $$$. The temptation for top global talent to go to the US to make their fortune - and then go back and retire comfortably at home - still exists, if not for the empire shooting itself in the foot through congesting their system with H1b Indians instead of targeting the actual top scientific and engineering talent - ie East Asians and Eastern Europeans.

Really???

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$500 doesn't even get you the ticket. And China doesn't have to let them in.
I find that the typical American is ignorant and lacks the foresight to do what makes the most financial and life-style sense; that doesn't mean, however, that they can't do it. I've seen countless examples of people doing this, but they tend to be from the smarter ethnic groups like Asians.

The only way for them to cash in on this is to buy huge quantities of Chinese products such that the savings outweigh the transaction and overhead costs, including the overhead cost of staying alive, fed, housed, and able to keep making McDonalds wages.

Yet because of how wasteful it is, the empire is struggling militarily, industrially and socially. Nazi Germany's GDP per capita was skyrocketing even as Soviet tanks closed in on Berlin and they lost their entire Eastern European industrial base.

Economic_development_of_Germany_1930-1950.jpg


China has historically taken USD to trade for western products. Once China is basically banned from buying any products that the west has a comparative advantage in, what is the point of USD?
The US dollar isn't just used by China. The strategy the US is currently pursuing is to use the power of the dollar to move manufacturing out of China and diversify it across the rest of the world - particularly among countries not likely to rebel against dollar hegemony. Once that's done, it'll sanction, isolate, and "contain" China until it bends the knee or becomes as poor and pathetic as Iran. Of course, it's having a hard time doing so, mainly because the "rest of the world" is particularly incompetent compared to China and so it's been difficult to replace what China offers, even with all the new investment.

But it would also be an exaggeration to say that there hasn't been any effect. Manufacturing, particularly low cost manufacturing, is diversifying; and Chinese manufacturing has been struggling more than it did in the past, if you look at total index numbers. The process the US kicked off - of developing manufacturing in the rest of the world - will effect changes, as we're seeing in places like Vietnam, Indonesia, and even India.

We're just fortunate that the Chinese government did have the foresight to invest and successfully transition the economy towards emerging technology sectors like green energy, electric vehicles, and robotics, where it has built a moat that even the US can't easily overcome. Otherwise, the hit to China's economy would've been much worse from US actions.
 

Biscuits

Colonel
Registered Member
Almost everything worth buying, has a price. The US's historical success was primarily accomplished through brain draining the rest of the world, and of course, they did this with $$$. The temptation for top global talent to go to the US to make their fortune - and then go back and retire comfortably at home - still exists, if not for the empire shooting itself in the foot through congesting their system with H1b Indians instead of targeting the actual top scientific and engineering talent - ie East Asians and Eastern Europeans.
Chinese are still granted visa at one of the highest rates in US, in fact this is a point of great sensitivity to Indians.

It's not for a lack of trying, it's just that the median income in China and US don't differ by much (gdp per capita is an average and not a median, therefore being distorted by the 0.1%).

In the last year, China had proportionally only as many H1Bs as Germany. And proportionally a lesser expatriation rate than EU. Because living standards have become very attractive at home.
I find that the typical American is ignorant and lacks the foresight to do what makes the most financial and life-style sense; that doesn't mean, however, that they can't do it. I've seen countless examples of people doing this, but they tend to be from the smarter ethnic groups like Asians.

The US dollar isn't just used by China. The strategy the US is currently pursuing is to use the power of the dollar to move manufacturing out of China and diversify it across the rest of the world - particularly among countries not likely to rebel against dollar hegemony.
Dollar is just a resource commodity "mined" in US, like qing gold or roman silver, it doesn't have a "power" aside from well, what gold or valuables have. They're "mined" and "sold" at a rate proportional to international demand.

You can't pay someone who has fuck all industry, education or innovation to out compete another power that has everything. And if you flood a small economy with money but no goods, you'll just ruin them with inflation.
Once that's done, it'll sanction, isolate, and "contain" China until it bends the knee or becomes as poor and pathetic as Iran.
If that's the plan it's as retarded as if Qing in 1800 decides to use it's unlimited reserves to boost SEA to replace Britain and then make Britain as poor as Dzungaria with sanctions. US has 0 influence on what China's industry lines and universities do.

US can cut off its own market, but then it risks China using nonviolent and violent pressure to kick open the door at a later date. If US can't match China in production and science, it will not be able to defend itself if China comes knocking later. Whether by peace or violence, smaller resource rich economies can't indefinitely give cold shoulder to larger industrialised ones.
Of course, it's having a hard time doing so, mainly because the "rest of the world" is particularly incompetent compared to China
No shit, because they're not even at the same stage of development?

As an example:
Teaser_Robot_Density.jpg
Keep in mind China has a lot of regions not focused on industry.
and so it's been difficult to replace what China offers, even with all the new investment.

But it would also be an exaggeration to say that there hasn't been any effect. Manufacturing, particularly low cost manufacturing, is diversifying; and Chinese manufacturing has been struggling more than it did in the past, if you look at total index numbers.
It has been "struggling" to increase its growth rate, but is still growing. And it can be near 100% chalked up to that there isn't much market left, it's hard to grow exponentially when you're already on top.
The process the US kicked off - of developing manufacturing in the rest of the world
You mean like graciously donating the whole personal vehicle sector to China?
- will effect changes, as we're seeing in places like Vietnam, Indonesia, and even India.
We're just fortunate that the Chinese government did have the foresight to invest and successfully transition the economy towards emerging technology sectors like green energy, electric vehicles, and robotics, where it has built a moat that even the US can't easily overcome. Otherwise, the hit to China's economy would've been much worse from US actions.
Because being a resource rich country (dollars are no different of a commodity than say Russian hydrocarbons) is not an all powerful automatic boon, it is something that needs to be carefully leveraged, otherwise it won't yield extra national power or increase your development level.

How do you think US lost all those fields to China in the first place?
 

tygyg1111

Captain
Registered Member
So you believe in the 17T $ China economy theory? By that theory, there are schroedinger's cars driving on schroedinger's streets in China, since China's net worth wouldn't be enough to buy them, yet apparently they exist in real life.
Correct - the cars and streets don't exist until an American sees them, and writes legislation to ban them. Before the legislation comes into effect, they are called "ghost cars" driving on "ghost streets", because in America, legislation is what makes something truly "real".
 

tygyg1111

Captain
Registered Member
Not only is China's electricity demand already twice that of the US but the growth of that demand is massively greater in China. US demand had basically flatlined in the last 15 years.

View attachment 142920

Unless you can produce things without electricity -- even designing things on paper or filming adult videos require electricity -- then there is no way you can imagine the US economy being bigger than China or -- even sillier -- try to tell us that the US economy is growing faster. That slope in demand growth for China is like Mt. Everest compared to the one for the US.
Using energy efficient webcams from China, certain sectors of the US economy have grown immensely...
 
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